Over-estimated interest on tax code notice

hunsen

Hi,

my wife has recently received a new tax code notice, in the notice it estimates "untaxed interest" as £1,127. This is well out.
Most of my wifes savings are in cash ISA accounts and are protected from cash, the remaining interest is less than £400 for the full year.
My wife works part time and I would like to take advantage of the married persons allowance before the end of the tax year, however, (As I understand it) the "untaxed interest" means that my wife is just into paying tax this year.

If I apply for the married persons allowance before the end of the year, she will pay more tax, can this be corrected after the end of the tax year? Will she get a refund?

To complete form R40, we will have to wait for the last interest payments for the year, while the tax man estimate is way out, is it ok to estimate ourselves and be £20-£30 out?

Dazed_and_confused

Maybe you could enlighten us to which tax year the code is for?

Are either of you in your eighties?

To pay tax on interest you normally have to have income greater than £17,850 in the current tax year.

Why are you thinking of completing an R40? Or is it your wife who is completing an R40. But even so why?

Dazed_and_confused

And you are more likely to get accurate help if you told us the facts. Like the total of your wife's taxable income for the year(s) in question.

Tax is all about the detail and there's not much to go on at the moment.

hunsen

Hi, sorry for the lack of detail, I am new to all this....

My wife earns less than £8,500 per year, the tax code notice is for 2018/2019. Both of us are under 80.

I am helping my wife complete form R40, because the .gov website seemed to lead to this - am I wrong? The reason why is to try and correct her tax code. What should I do?

The detail on the tax code notice are as follows;
Personal allowance - £11,850
Total - £11,850
Less untaxed interest - £1,127
Total tax free amount - £10,723

The bottom line is she is paying tax (she is employed) and she should not be.

Thank you all for your kind response.

Dazed_and_confused

Who has deducted tax from your wife's income?

And your opening post referred to "Married persons allowance". There is no such thing.

There is Married Couple's Allowance. But one of you would have to be born in the 1930's to qualify for that.

There is also Marriage Allowance. Which is probably what you mean? Is that correct?

hunsen

We have just got married and I am looking into all this after her tax code notice arrived.

Her employer is deducting tax based on her tax code.

By married person allowance, I mean the current regulation for working age people to transfer 10% of their tax allowance to their husband / wife.

Dazed_and_confused

I mean the current regulation for working age people to transfer 10% of their tax allowance to their husband / wife.

You have invented this, there is no such thing for "working age people". Any married couple where neither pay higher rate tax* is eligible for Marriage Allowance. Not every couple can benefit from it but you and your wife probably can.

If you are elderly (85+ I think) there is a different allowance, Married Couple's Allowance, which is more beneficial. But a couple who are both 80 could in theory be eligible (and benefit from ) Marriage Allowance.

*there are complicated exceptions but they don't apply to most people.

Her employer is deducting tax based on her tax code.

Can you post the details from her latest payslip?

A tax code of 1072L means her employer can pay her £10,729 by the end of the tax year and no tax would be payable. You say she earns less than £8,500 so I'm at a bit of a loss as to why her employer is deducting tax.

It sounds like she has bigger issues to worry about before sorting out the untaxed interest and Marriage Allowance. Always better to get the basics out of the way first.

Is there some additional income you haven't previously disclosed?

Maybe your wife is earning £8,500 today but earlier in the tax year she was earning say £20k??

hunsen

I came here seeking advice, because I am not familiar with tax rules, nor do I know the exact term for the income tax benefits for people who are married. That is because, until Tuesday, I have never been married.

That is why I am seeking advice.

But if I you are just going to quote me as "inventing" terms, in an attempt to make me look less smart or more stupid, then I should just go back to the .gov website and struggle through.

Dazed_and_confused

No, just trying to help make sure you understand what you are getting involved in.

If you read enough threads on here you will find there are plenty of examples of people applying for Marriage Allowance and ending up with a tax bill simply because they haven't understood it.

If you want to post the payslip info great but if not there is little else anyone can do to help.

You may want to read up on the savings starter rate of tax as that might be relevant to your wife's situation.

xylophone

Have a look at these links

http://www.taxvol.org.uk/about-tax/entitled-10-band-savings-interest/

https://www.litrg.org.uk/tax-guides/pensioners/what-tax-do-i-pay-savings-income

Have a look at example Marjorie here

https://www.litrg.org.uk/tax-guides/tax-basics/what-tax-allowances-am-i-entitled#Cheng